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Speaker 1: Welcome to Fear and Greed Q and A, where we

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Speaker 1: ask and answer questions about business, investing, economics, politics and more.

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Speaker 1: I'm Sean Almer. Twenty twenty five has been Gold's year.

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Speaker 1: The price of the precious metal saled past the three

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Speaker 1: thousand USD mark in March, then hit four thousand dollars

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Speaker 1: an ounce in October. How far can it go? Remember

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Speaker 1: this is general information only and you should seek advice

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Speaker 1: before making investment decisions. Robin Suey is the APAC Gold

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Speaker 1: strategist at State Street Investment Management. Robin, Welcome to Fear

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Speaker 1: and Greed Q and A.

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Speaker 2: Hi Sean, thanks for having me.

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Speaker 1: Have you ever seen a run in gold like this one?

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Speaker 1: And I'm assuming you're going to say no to that,

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Speaker 1: But does it compared to any other metal?

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Speaker 2: Well, I've been covering gold for the last fifteen years,

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Speaker 2: so definitely this year has been If price states at

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Speaker 2: the current level, goal pricing US does will be up

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Speaker 2: about sixty percent. It's going to be the best performing

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Speaker 2: years since not in something nine. So basically we're not

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Speaker 2: going to get a repeat obviously next year, but we

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Speaker 2: still remain quite bullish on the current bullmarket cycle. But

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Speaker 2: if you look at other metals, Yes, if you look

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Speaker 2: at silver, platinum, those metals has actually outperformed GOAL. But

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Speaker 2: I think structurally there's more drivers for a sustained GOAL

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Speaker 2: rally compared to other metals that we current study.

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Speaker 1: So just run through. I mean, you know, we talk

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Speaker 1: about safe haven status et cetera, et cetera, but it

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Speaker 1: must go much deeper than that.

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Speaker 2: Well. Historically, yes, I think GOAL has been the choice

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Speaker 2: for glue invessas as a Heah, there's no doubt since

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Speaker 2: GFC fifteen years ago, Goal was rally from about seven

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Speaker 2: hundred US per hounds to about four thousand, two hundred.

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Speaker 2: But this year particularly, we are sort of seeing some

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Speaker 2: of the new drivers that's pushing gold prices higher. I

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Speaker 2: think one of the main reasons has been obviously the

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Speaker 2: Trump trade tensions. Liberation data has really brought infestus more

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Speaker 2: into Goal as a way to hatch against potential dollar

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Speaker 2: weakness dedillarization. I think the client's been talking to in

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Speaker 2: Asian APAK, some of the asset owners and even central banks.

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Speaker 2: They are actually thinking about moving some assets into GOAL,

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Speaker 2: maybe from the US Treasury or US cash because the

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Speaker 2: theme of dediriization is actually getting more significant this year,

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Speaker 2: and of course the FED rate cuts that started in September.

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Speaker 2: The FED had two rate cuts since we're expecting another

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Speaker 2: rate cut in December. A lower industrate environment tend to

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Speaker 2: be quite beneficial for goal prices, and if we're throwing

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Speaker 2: a lot of other factors like dual politics, the risks

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Speaker 2: of slacklation, potential for autilty, there's actually a lot of

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Speaker 2: tail winds at the moment to support goal prices and

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Speaker 2: goal demand. Gold demand surprisingly has not slowed down. In

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Speaker 2: Q three, we saw a record amount in the goal

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Speaker 2: back ETFs globally and also quite a strong demand into

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Speaker 2: gold bars and coins. So despite the rising goal price

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Speaker 2: environment that we're seeing infestis ranging from institutional, intermediates and retail,

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Speaker 2: they are still one some exposure in goal and I

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Speaker 2: think that's something we have not seen that strong in

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Speaker 2: the past versus this year.

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Speaker 1: How important it's been the role of central banks in

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Speaker 1: the past few years, particularly the Chinese Central Bank.

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Speaker 2: It's definitely has been one of the main reasons why

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Speaker 2: gold price has been doing so well. I think since

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Speaker 2: twenty twenty two, the central banks, including China the PBOC,

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Speaker 2: has been ramping up the goal exposure. On average, central

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Speaker 2: banks now purchase around one thousand tons of GOAL. Pre

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Speaker 2: twenty twenty two, on average it was around five hundred

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Speaker 2: tons of GOAL. So basically in the last three years,

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Speaker 2: central banks has doubled the purchases. The reason beings because

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Speaker 2: the US sanctioned Russia back in twenty twenty two. That

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Speaker 2: has triggered some worries about emerging markets central banks, probably

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Speaker 2: including China as well, that they might need to diversify

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Speaker 2: the holdings in US currencies, and that's the reason why

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Speaker 2: gold price has been well supported. Central banks will continue

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Speaker 2: to be the main support for goal prices, and based

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Speaker 2: on our conversation this year, we continue to believe that

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Speaker 2: central banks will continue to ramp up because if you

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Speaker 2: look at globally some of the emerging markets, central banks

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Speaker 2: have very low exposure to goal, so rare like a

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Speaker 2: global investors, they would like to increase more exposure as

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Speaker 2: a way to diversify it.

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Speaker 1: Okay, so where are we going with goal prices? Because

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Speaker 1: everything we've spoken about robin Is suggests that there is

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Speaker 1: still plenty of demand out there for gold and while

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Speaker 1: it has come off a little, are you forecasting that

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Speaker 1: it will go higher next.

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Speaker 2: Year, So we do have a three I guess scenario

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Speaker 2: in terms of base case, bookcase, and bare case. Now,

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Speaker 2: as I suggest before, we're not going to expect another

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Speaker 2: six percent rise next year. In our base case, we

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Speaker 2: expect goal price to hit four thousand and five are

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Speaker 2: US pounds, So if we're looking at the current level

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Speaker 2: of four thousand and two, it's about eight percent upside

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Speaker 2: from the current spot prize and that's actually in line

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Speaker 2: with the historical average of Goal in terms of the

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Speaker 2: annual gain. So in the last fifty six years, the

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Speaker 2: annual average gain has to be about nine percent for Goal.

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Speaker 2: So we are converting back what we think it's our

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Speaker 2: conservative case. In terms of bookcase. Now we do have

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Speaker 2: a bookcase which gold price could hit five thousand, but

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Speaker 2: we sort of need some sort of unknown market factors

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Speaker 2: or some sort of volatility. So we need a shock

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Speaker 2: in the equity market, which we have not seen since April.

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Speaker 2: We probably need some observation of rising fee of slack fation,

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Speaker 2: which we probably have not seen in the last couple

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Speaker 2: of six months, and potentially a acceleration of US dollar weakness.

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Speaker 2: So if the FED decide to cut rates more aggressively

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Speaker 2: than the market expects, so we expect three rate cuts

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Speaker 2: next year. But if the new chairman comes in next

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Speaker 2: year here or she becomes very dubbish on the FED

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Speaker 2: rate cuts, that's going to put a lot of pressure

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Speaker 2: on the dollar. So we actually need multiple scenarios to

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Speaker 2: come in to push the case for gold to hit

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Speaker 2: five thousand. And when you think about five thousand, it's

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Speaker 2: about twenty three percent upside from the current spot price,

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Speaker 2: which actually we saw back in twenty and twenty four

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Speaker 2: when goal price did rich, it did hit about twenty

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Speaker 2: five percent return. A bare case, we might see gold

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Speaker 2: price hitting three thousand and five, and that's sort of

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Speaker 2: a price a lot of investors actually do like because

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Speaker 2: there's a lot of clients of ours they would like

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Speaker 2: to get in at a reasonable price level. So three

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Speaker 2: dozen fi it's a it's a bare case we expect,

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Speaker 2: but again that needs multiple I guess reasoning drivers. If

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Speaker 2: there's a more resigned environment, if the dollar, your stolen

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Speaker 2: index increases, if there's less demand into Goal, potentially we

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Speaker 2: can see a bare case scenario. But we feel quite

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Speaker 2: confident that at three thousand and five to that three

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Speaker 2: thousand and seven level, there will be many many central

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Speaker 2: banks that would love to get in, including China and

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Speaker 2: all other measure market central banks. Because mention markets and

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Speaker 2: your bank state are place sensitive two prices. So if

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Speaker 2: the price level do dip to around three thousand and

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Speaker 2: five US perounds, we do believe that's going to be

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Speaker 2: a quite a strong supporting level for the gold market.

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Speaker 1: So I mean essentially that provides the floor if nothing else,

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Speaker 1: though your central case scenario is about forty five hundred

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Speaker 1: at some point next year.

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Speaker 2: Yes, I think conservatively in our base case four thousand

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Speaker 2: and five, referring back to the historical average of return,

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Speaker 2: but we might see some shocks next next year through

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Speaker 2: the equity market the bond market. If that happens, of course,

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Speaker 2: we can potentially see what we saw back in April

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Speaker 2: or May when gold Plas did what's quite well supported

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Speaker 2: because of the shocks that we saw in the equity market.

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Speaker 2: So in the base case four thousand and five, in

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Speaker 2: our bookcase five thousand US per pounds next year.

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Speaker 1: Robin, thank you for talking to you here, and Greed,

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Speaker 1: thank you. That was Robin swey Apac gold strategist at

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Speaker 1: State Street Investment Management. And a reminder to police seek

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Speaker 1: professional advice before making investment decisions. If you've got something

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Speaker 1: you'd like to know, then send through your question via LinkedIn, Instagram, Facebook,

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Speaker 1: or at fearangreed dot com. Today you I'm Seanelma and

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Speaker 1: this is peer and Greed Q and A